LONDON—T&T’s biggest single foreign exchange earner, BP, yesterday announced that its fourth-quarter earnings plunged 91 per cent, even as it said it would sack 3,000 more employees and sell US$5 billion in additional assets, as the company tries to address sharp declines in oil prices.

The company reported yesterday that underlying replacement cost profit fell to US$196 million from US$2.2 billion in the same quarter a year earlier and well below analyst expectations of US$730 million. Replacement cost profit is an oil industry accounting standard that includes fluctuations in the price of oil and excludes one-time items.

BP said it lost US$6.5 billion in 2015, which was bigger than the overall loss of US$4.9 billion it reported in 2010, even though it took a US$17.2 billion hit in the second quarter of that year after the explosion in the Gulf of Mexico. BP declined to comment when asked if the company’s 2015 loss was the biggest on record.

“It’s going to be a very turbulent year for our industry,” CEO Bob Dudley said as he opened a news conference in London.

Oil companies are slashing jobs and delaying investments as crude prices plummet. Brent crude, the benchmark for international oil, fell 34 per cent last year and hit a 12-year low of US$27.10 a barrel in January. It traded at US$34.13 on Monday, having been above US$100 a barrel as recently as September 2014.

The company also set aside an additional US$443 million in the quarter to cover costs related to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. Charges for the spill now total US$55.5 billion.

BP stock fell sharply on the news by early afternoon, dropping nearly nine per cent to £3.35.

Yet Dudley took the numbers in stride, arguing that the markets had failed to take into account a robust US$5.8 billion operating cash flow for the quarter. The overall net loss narrowed to US$3.3 billion from US$4.4 billion a year earlier.

The company also said it was taking steps to streamline redundant systems put in place for legal reasons after the spill.

“We have our confidence back now,” he said.

The company said it reduced controllable cash costs by US$3.4 billion last year, and estimated future cuts at almost US$3.6 billion. It forecast asset sales of as much as US$5 billion this year.

BP also announced 3,000 job cuts globally by the end of 2017. That is in addition to 4,000 cuts planned in exploration and production—including some 600 in North Sea operations. European rival Royal Dutch Shell, which reports earnings later this week, said in January that its planned merger with British gas producer BG Group would result in some 10,000 staff and contractor job losses across both companies.

Oil prices have plunged because global supply is high at a time when consumption is growing more slowly than expected, particularly in China.

OPEC members, meanwhile, are refusing to cut production for fear of losing market share to non-members like the US and Russia. And Iran is looking to start pumping more after decades of sanctions.

BP is supported somewhat during the current price slump by higher margins at its downstream business, which includes refining and selling fuels. But that’s not enough to offset the broader impact of the market drop, said Spencer Welch, an oil expert at IHS.

“Without the ongoing costs of Macondo/Gulf of Mexico, then BP would still have made a reasonable profit in 2015, mostly from the downstream business,” Welch said in an email.

Dudley said he expected a tough 2016, particularly in the first half. There are few predictions that oil prices will bounce back quickly, with some analysts forecasting they will drop to near $10 a barrel. And that means lots of uncertainty.

“I expect continued layoffs, restructurings, and consolidated among oil and gas companies,” said Gianna Bern, associate teaching professor of finance at the University of Notre Dame. “We are witnessing the perfect storm in this industry.”

The oil and gas sector is set to slash spending to its lowest in six years in 2016 to $522 billion, following a 22 per cent fall to US$595 billion in 2015, according to analysts. (AP)